Perdue announced her decision Sunday - the last day she had to act before it would have become law.

The measure now returns to the General Assembly, where a veto override this week is uncertain because there may not be enough votes.

The bill would allow horizontal drilling and hydraulic fracturing, called fracking for short. The measure requires the Legislature to vote again to allow permits once environmental standards are in place in 2014.

Environmentalists say the threat to drinking water from the process and potential shale gas supply in central North Carolina isn't worth the risk.